Bertram’s launch of $650 mln Fund IV adds to growth equity heyday

Growth investor Bertram Capital began marketing a fourth lower-mid-market fund, adding to an array of new offerings that have made growth equity this year’s most popular strategy after buyouts.

Bertram is targeting $650 million for Bertram Growth Capital IV, according to a Form D fundraising document. It comes less than two years after the final close of Fund III at a target and hard cap of $500 million.

If the latest fund reaches its goal, it will be the Foster City, California-based private equity shop’s largest to date, surpassing its predecessor by 30 percent.

Fund III was backed by more than 30 limited partners, including endowments, family offices, insurers, multi-manager funds and pension plans. Disclosed investors include Houston Firefighters’ Relief and Retirement Fund. The fund charges a 2 percent management fee and 20 percent carry on realized profits in excess of an 8 percent preferred return, Bertram’s ADV filings show.

Bertram did not respond to a request for comment on this story.

Founded in 2006, Bertram makes control investments in high-growth companies in the business services, consumer, industrial/manufacturing and tech sectors. Target opportunities generally have revenue of $25 million to $250 million and Ebitda of $5 million to $35 million.

Bertram writes checks of $25 million to $250 million for platform investments, which average nine to 12 per fund. The firm partners with owner-operators of businesses that are recapitalizing, undertaking liquidity events or management buyouts, or spinning out of larger corporate entities.

In 2019’s global fundraising market, growth equity has had considerable momentum, PEI Research data show. The strategy was the second most popular at the end of September, accounting for 18 percent of funds closed and 22 percent of the $296 billion raised in all. This builds on fundraising gains made in prior years.

Along with capital, Bertram deploys a strategy, called Bertram High-5sm, to help portfolio companies maximize growth through acquisitions, enhancing operations, improving sales and marketing, leveraging tech and IP and strengthening management. A key part of the strategy is Bertram Labs, an in-house tech advisory team.

At present, Bertram’s portfolio holds 13 investments, according to the firm’s website. They include Solo Stove, a Dallas-based provider of portable, low-smoke fire pits and camping stoves. Bertram acquired the business in September.

Earlier in 2019, Bertram invested in Perennials and Sutherland, a Dallas-based maker of performance fabrics, rugs and outdoor furniture. It also acquired Flow Control Group, a Charlotte, North Carolina-based flow control and fluid-handling distribution system, from AEA Investors.

Bertram is led by Managing Partner Jeff Drazan, previously a co-founder and managing director of Silicon Valley venture capital firm Sierra Ventures. Other senior team members are Partners Ryan Craig, Jared Ruger, Kevin Yamashita, Tom Beerle, Tim Heston, David Hellier and Brian Wheeler.

Bertram Growth Capital II, closed in 2010, generated a net IRR of 18.6 percent as of March 2019, according to data provided to Preqin by Indiana Public Retirement System.

Action Item: See Bertram Capital’s ADV filings here.